Steinbergh v. City of Cambridge

• Decision Date: 10 December 1992
• Citation: 604 N.E.2d 1269,413 Mass. 736
• Parties: Alex STEINBERGH & another, 1 trustees, 2 v. CITY OF CAMBRIDGE & another. 3
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1269

604 N.E.2d 1269

413 Mass. 736

Alex STEINBERGH & another, ¹ trustees, ² v. CITY OF CAMBRIDGE & another. ³

Supreme Judicial Court of Massachusetts,

Middlesex.

Argued Sept. 15, 1992.

Decided Dec. 10, 1992.

Frederick B. Hayes, III, Cambridge, for plaintiffs.

Thomas J. Urbelis, Boston (Devra G. Bailin, with him), for defendants.

Before LIACOS, C.J., and WILKINS, O'CONNOR and GREANEY, JJ.

WILKINS, Justice.

In Steinbergh v. Rent Control Bd. of Cambridge, 406 Mass. 147, 546 N.E.2d 169 (1989) (Steinbergh I ), this court held that the city of Cambridge lacked authority to adopt a particular ordinance provision intended to discourage the unlawful removal of rent-controlled housing units from the rental market. That provision, a subsection of the city's ordinance concerning the removal of rent-controlled properties from the market, purported to restrict the sale of individual condominium units by a property owner owning more than one condominium unit in a building. The ordinance provision denied such an owner the right to sell individual condominium units unless the rent control board of Cambridge (board) granted a removal permit or the tenant had an exemption certificate. See id. at 148 n. 4, 546 N.E.2d 169, for the specific provision.

In this action, commenced on February 9, 1990, the same plaintiff property owners who were involved in Steinbergh I seek an award of damages against the city on the theory that the city's unlawful restriction on their right to sell individual condominium units was unconstitutional and deprived them, to their financial detriment, of the right to sell individual condominium units from September 14, 1987 (the date the board denied the plaintiffs' application for removal permits) until November 20, 1989 (the date this court's opinion in Steinbergh I was released invalidating the challenged portion of the ordinance).

The plaintiffs' principal contention is that the city's application to their property of the challenged ordinance provision constituted an uncompensated, temporary regulatory taking of property in violation of art. 10 of the Massachusetts Declaration of Rights and the Fifth Amendment to the Constitution of the United States, applicable to the States through the Fourteenth Amendment. Chicago, B. & Q. R.R. v. Chicago, 166 U.S. 226, 241, 17 S.Ct. 581, 586, 41 L.Ed. 979 (1897). The plaintiffs further claim a denial of due process of law under the State and Federal Constitutions and a denial of equal protection of the laws under the Constitution of the United States.

Our discussion of these issues will focus on the claimed violations of the Constitution of the United States. The plaintiffs do not argue that, acting under the Constitution of the Commonwealth, this court should apply any principle different from that established by the United States Supreme Court. In considering whether economic regulations satisfy due process, we have established no substantially different guiding standards under the Commonwealth's Constitution than the Supreme Court has established under the Constitution of the United States. See Opinion of the Justices, 408 Mass. 1215, 1217-1218, 563 N.E.2d 203 (1990); Blue Hills Cemetery, Inc. v. Board of Registration in Embalming & Funeral Directing, 379 Mass. 368, 373 n. 8, 398 N.E.2d 471 (1979). Although a similarity in standards under the "takings" clauses of the two Constitutions has not been as clearly established, the plaintiffs have advanced no reason why we should create takings principles more favorable to them than those developed under the Federal Constitution.

The case was heard below on cross motions for summary judgment. ⁴ The city contended that the judgment entered in Steinbergh I barred the plaintiffs' claims for damages and that, in any event, as a matter of law there had been no uncompensated taking or other constitutional violation. There appears to be no dispute of material fact. The motion judge rejected the city's argument that the plaintiffs were barred by the earlier judgment from presenting their constitutionally-based claim for damages but agreed with the city that its conduct did not amount to a taking or to a denial of due process of law or equal protection of the laws. We allowed the plaintiffs' application for direct appellate review of the judgment entered in the city's favor. We affirm the judgment.

The city's rent control regulations are authorized by St.1976, c. 36. The provision in the city's regulations whose effect is in controversy here was adopted on June 29, 1981. The plaintiffs purchased the fifty-three condominium unit property at 16 Chauncy Street on August 1, 1986. On September 14, 1987, the board ruled that the challenged regulation barred the plaintiffs from selling individual condominium units without permission from the board. During the period from September, 1987, to November, 1989, the plaintiffs received net income from the property of approximately $120,000. After Steinbergh I was decided in November, 1989, the plaintiffs sold thirty-six units to individual buyers and on December 31, 1989, they still owned seventeen units. The plaintiffs assert that the market value of their condominium units declined between September, 1987, and November, 1989, and seek recovery from the city for their losses, which they allege to be approximately $374,000.

1. The judge was correct in concluding that this action was not foreclosed by the judgment entered in Steinbergh I. The plaintiffs' claim for damages for a temporary regulatory taking is precluded only if their damage claim was or should have been adjudicated in Steinbergh I. Heacock v. Heacock, 402 Mass. 21, 23, 520 N.E.2d 151 (1988).

The damages claim was not adjudicated in Steinbergh I. The plaintiffs' amended complaint in Steinbergh I, which was an action for judicial review of the board's determination, pursuant to St.1976, c. 36, § 10, did not seek damages for a temporary taking of their property or for any other constitutional violation. That is hardly surprising in an appeal from the decision of an agency that had no authority to award damages. The amended complaint alleged that, in ruling that the regulation applied to the plaintiffs, the board acted in excess of its statutory authority and, in various other ways, in violation of law (including in violation of the State and Federal Constitutions). By that complaint, the plaintiffs sought a ruling that they were exempt from the challenged ordinance provision, but they made no allegation or prayer concerning an award of damages because of a taking of property or other constitutional violation. Indeed, a precise determination of damages prior to a final ruling that the regulation was invalid and that a damage award was appropriate would not have been possible.

The plaintiffs were not obliged, at their peril, to include in Steinbergh I a claim for damages based on constitutional violations. Steinbergh I was an appeal governed by G.L. c. 30A and based on the agency record. This court expressly did not reach the plaintiffs' constitutional challenges to the regulation, after concluding that the regulation was beyond the rent board's authority. Steinbergh I, supra 406 Mass. at 148, 546 N.E.2d 169. The plaintiffs were not reasonably able to seek damages until the basis for their takings claim was established. Only after the regulation was ruled unlawful could the plaintiffs determine precisely whether the delay had caused them any harm. A regulatory takings claim often is not mature until the validity of the challenged local regulation has been determined. See Corn v. Lauderdale Lakes, 904 F.2d 585, 587 (11th Cir.1990). Claim preclusion principles do not reach such a contingent claim so as to require that it be asserted in the first action, if it is to be asserted at all.

2. The city did not make a taking of property for which the plaintiffs are entitled to compensation under the takings clauses of the State and Federal Constitutions. The general concept that a government regulation that "goes too far" is a taking was expressed seventy years ago. See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922). The problem over the years has been to define how far "too far" is. When the claim is that government conduct, not amounting to a permanent physical occupation or confiscation of property, involves a regulatory taking, the analysis is peculiarly fact dependent, involving "essentially ad hoc, factual inquiries." Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978). See Yankee Atomic Elec. Co. v. Secretary of the Commonwealth, 403 Mass. 203, 209, 526 N.E.2d 1246 (1988).

The alleged taking does not fall within either of the two categories of governmental regulatory action that constitute compensable takings without regard to other considerations, such as the public interest sought to be advanced. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, ----, 112 S.Ct. 2886, 2893, 120 L.Ed.2d 798 (1992). First, the challenged regulation did not authorize, direct, or otherwise involve a physical intrusion into the plaintiffs' property. See Nollan v. California Coastal Comm'n, 483 U.S. 825, 831, 107 S.Ct. 3141, 3145, 97 L.Ed.2d 677 (1987); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432-433 n. 9, 102 S.Ct. 3164, 3174 n. 9, 73 L.Ed.2d 868 (1982); Fragopoulos v. Rent Control Bd. of Cambridge, 408 Mass. 302, 309, 557 N.E.2d 1153 (1990). Second, the challenged regulation did not deny all economically beneficial or productive use of the plaintiffs' interest in the property. See Lucas v. South Carolina Coastal Council, supra, 505 U.S. at ---- - ----, 112 S.Ct. at 2893-2895; Agins v. Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980). The plaintiffs collected rents while they pursued their challenge to the regulation; they received a return on their investment during that...